The Golden State has lost its economic luster, triggering serious consequences for retailers and vendors.

California, the most populous state, the biggest U.S. market and a bellwether for the nation, is being especially hard hit by the implosion in housing, soaring gasoline and food prices, job cuts and tight credit.

Retail sales are down, some stores are scaling back expansion and vendors said customers are late with payments. Even a linchpin $3 billion downtown Los Angeles mixed-use development is being delayed because of financing difficulties.

The number of homes going into default in the state doubled in the first quarter, and the 6.2 percent unemployment rate in March was the third highest in the U.S.

"We're working hard for every dollar we get in the store today," said John Martens, vice president and general manager of Neiman Marcus' Beverly Hills store. "It's not business as usual; times have changed. It's a very challenging time for us and for most retailers."

Nordstrom Inc.'s fourth-quarter conference call in late February exposed the rough road ahead for the chain in California. "In the short term we face challenges in our business, particularly in women's apparel and regionally in California," the company said.

"Overall it's a much tougher retail environment out there so we are focused on the elements we can control — the merchandise in stores and service we can offer customers," Nordstrom spokesman Michael Boyd said last week.

Neiman Marcus and Nordstrom, however, said the situation hasn't altered their plans for expansion in the state. Nordstrom is to open in September at The Oaks in Thousand Oaks, Calif., and at Newport Beach's Fashion Island mall in 2010. Neiman Marcus is launching a store in September at Westfield Topanga mall in the Los Angeles suburbs, and another in 2011 at Northern California's Walnut Creek.

The plans are in contrast with those of Gottschalks Inc., the Fresno, Calif.-based moderate-priced regional department store that operates 59 locations, 39 in California. Amid same-store sales that fell 12.9 percent in March, Gottschalks is putting off opening two new concept stores in California — scaled-down versions of its 100,000-plus-square-foot models.